STEPHANIE L. STEIGERWALD, Plаintiff-Appellee, v. COMMISSIONER OF SOCIAL SECURITY, Defendant-Appellant.
No. 21-3023
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
Argued: October 28, 2021 | Decided and Filed: September 9, 2022
RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b). File Name: 22a0210p.06. Before: MOORE, KETHLEDGE, and DONALD, Circuit Judges.
Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 1:17-cv-01516—James S. Gwin, District Judge.
COUNSEL
ARGUED: Dennis Fan, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant. William Escobar, KELLEY, DRYE & WARREN LLP, New York, New York, for Appellee. ON BRIEF: Dennis Fan, Charles W. Scarborough, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant. John H. Ressler, ROOSE & RESSLER, Lorain, Ohio, Ira T. Kasdan, Bezalel A. Stern, KELLEY, DRYE & WARREN LLP, Washington, D.C., Joseph A. Boyle, KELLEY DRYE & WARREN LLP, Parsippany, New Jersey, for Appellee. Neil H. Good, THE GOOD LAW GROUP, Palatine, Illinois, for Amicus Curiae.
MOORE, J., delivered the opinion of the court in which DONALD, J., joined. KETHLEDGE, J. (pp. 16–17), delivered a separate dissenting opinion.
KAREN NELSON MOORE, Circuit Judge. The Social Security Administration (SSA) failed to perform a statutorily obligated duty to pay claimants the total amount of benefits to which they are entitled. To ensure that claimants receive the entirety of these benefits, Congress enacted two provisions in the Social Security Act: a judicial-review provision to keep the agency honest and an attorney-fees provision to incentivize lawyers to represent claimants. Because the SSA may not hide behind these statutory provisions merely because it erred at the end, rather than at the beginning, of the benefits-award process,
I. BACKGROUND
As the district court in this case rightly noted, “[t]he mechanics of the alleged underpayment are fairly byzantine,” so we provide a summary for clarity. Steigerwald v. Berryhill, 357 F. Supp. 3d 653, 654 (N.D. Ohio 2019). The SSA awards a claimant a certain amount of benefits, which a claimant may challenge through a series of procedural steps that involve a hearing before an Administrative Law Judge. See Smith v. Berryhill, 139 S. Ct. 1765, 1772 (2019). Those benefits are awarded pursuant to Title II of the Social Security Act,
A claimant‘s income impacts eligibility for and the amount of Title XVI benefits, and any disability benefits that a claimant receives under Title II are considered income under Title XVI. See
The same principles apply when a claimant retroactively receives past-due Title II benefits, or “benefits that accrued before a favorable [SSA] decision.” Culbertson v. Berryhill, 139 S. Ct. 517, 520 (2019). When a claimant receives past-due Title II benefits, the SSA adjusts any need-based Title XVI award to account for the claimant‘s additional award of past-due Title II disability income. See
When a claimant hires a representative, such as an attorney, to assist in obtaining past-due benefits before the SSA, an additional wrinkle complicates the SSA‘s benefit calculations. A claimant may elect to pay the representative fees out of the award of past-due benefits. See
Fees that attorneys or representatives recover for their work in procеedings before the SSA under
II. ARTICLE III STANDING
Before proceeding to the merits, we follow our “obligation to assure ourselves of litigants’ stаnding under Article III.” Fednav, Ltd. v. Chester, 547 F.3d 607, 614 (6th Cir. 2008) (quoting DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 340 (2006)). Article III standing requires a party to have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). On appeal, Class Counsel argues that because fees in this case are awarded out of claimants’ past-due benefits, the SSA has no monetary interest, and therefore has suffered no injury in fact to support standing.
Class Counsel‘s argument does not persuade us. Broadly speaking, the SSA retains an interest in benefiting disabled persons through its “humanitarian policy.” Lewis v. Sec‘y of Health & Hum. Servs., 707 F.2d 246, 248 (6th Cir. 1983). Even without a pecuniary stake, the SSA maintains an obligation to promote those interests. See In re Debs, 158 U.S. 564, 584 (1895). Specifically, in an attorney-fees case proceeding under
In an attempt to sidestep these cases, the SSA focuses on an analogy that the Court made in Gisbrecht—that the Commissioner‘s role “resembl[es] that of a trustee for the claimants.” Id. According to Class Counsel, the SSA has disavowed its role as trustee by taking adverse positions to the claimants in this litigation and thus cannot rely upon its interests in claimant protection to confer standing. Class Counsel takes the Court‘s analogy too literally. Although the SSA may have taken positions adverse to the claimants on the merits in this case, the SSA still retains an interest generally to protect the beneficiaries that it serves, which it asserts in this attorney-fee challenge. These interests sufficiently confer standing to the SSA under Article III.
III. ATTORNEY FEES UNDER THE SOCIAL SECURITY ACT
Assured of the SSA‘s standing under the Constitution, we turn next to the statutory foundation for awarding attorney fees. Pursuant to
A. Presentment
Section 405(g) “contains two separate elements: first, a ‘jurisdictional’ requirement that claims be presented to the agency, and second, a ‘waivable . . . requirement that the administrative remedies prescribed by the Secretary be exhausted.‘” Smith, 139 S. Ct. at 1773 (quoting Mathews v. Eldridge, 424 U.S. 319, 328 (1976)). In its opinion denying the SSA‘s motion to dismiss, the district court rejected the SSA‘s argument that Stephanie Steigerwald, the class representative, failed to present her claims pursuant to
But as the district court noted, Steigerwald‘s attorneys sent the SSA a letter informing the SSA that they would not be seeking more attorney fees and asking the SSA to “release the withheld benefits” to Steigerwald. Steigerwald, 2018 WL 454400, at *3–4. Not only did Steigerwald present her initial claim for benefits to the SSA, but she also requested that the SSA perform the Subtraction Recalculation. Steigerwald asked the SSA for the specific relief that she sought, and we agree with the district court that presentment requires nothing more. See Heckler v. Ringer, 466 U.S. 602, 617 (1984) (holding that respondents satisfiеd presentment requirement by filing a claim for surgery reimbursement with Medicare administrator); A1 Diabetes & Med. Supply v. Azar, 937 F.3d 613, 615, 618 (6th Cir. 2019) (holding that medical services contractor “presented its claim for benefits to the relevant agency” by challenging a Medicare auditor‘s decision). Because Steigerwald presented her claim to the agency, the district court properly exercised jurisdiction over this case. The question at the heart of this case—whether SSA‘s action was a “final decision . . . made after a hearing” for the purposes of judicial review—instead “involves the latter, nonjurisdictional element of administrative exhaustion.” Smith, 139 S. Ct. at 1773-74.
B. Preservation
We pause to address Class Counsel‘s myriad preservаtion arguments. Because this case involves the waivable issue of exhaustion, the question of whether the SSA properly preserved its judicial-review arguments merits consideration. Preservation questions loom especially large in this case because we are addressing, at this late stage of litigation evaluating attorney fees, whether the district court even had the authority to issue the order that led to these fees at all. Nevertheless, we conclude that we may reach the SSA‘s arguments, either because the district court addressed them or the SSA properly preserved them.
The SSA argues first that the district court had authority to order the Subtraction Rеcalculation, just not under the authority that Class Counsel cites. On appeal, the SSA grounds the district court‘s authority in the Mandamus Act,
Notwithstanding the SSA‘s vacillation on the source of the district court‘s authority, we find it appropriate to address the SSA‘s judicial-review argument. The SSA‘s argument at the motion-to-dismiss stage focused on an entirely different issue (whether the plaintiff properly presented her claims before the SSA) and did not resemble an “intentional relinquishment or abandonment of a known right” that characterizes waiver. Ohio State Univ. v. Redbubble, Inc., 989 F.3d 435, 443 (6th Cir. 2021) (quoting United States v. Petlechkov, 922 F.3d 762, 767 (6th Cir. 2019)). We have addressed an issue raised for the first time below, moreover, “[where] the district
Class Counsel further argues that the SSA failed to preserve its arguments on appeal because (1) the SSA should have timely appealed the district court‘s finding in its summary-judgment order that class counsel were eligible for fees and yet failed to do so and (2) the SSA should have raised the district court‘s lack of judicial-review power when it challenged the district court‘s eight-month deadline to complete the Subtraction Recalculations in a separate appeal (Case No. 19-3527). A party may wait, however, for a district court‘s determination of the amount of attorney fees owed to challenge liability for attorney fees. Morgan v. Union Metal Mfg., 757 F.2d 792, 795–96 (6th Cir. 1985). That is exactly what the SSA did here, and thus it did not waive its challenge to the propriety of fees on appeal.
On the second point, the SSA did not need to raise the issue of the basis for judicial review in its other appeal because judicial review had nothing to do with the relief that the SSA seeks in that appeal. “[R]equests for attorneys’ fees ‘raise[ ] legal issues collateral to the main cause of action,‘” id. at 794 (quoting White v. New Hampshire Dep‘t of Emp. Sec., 455 U.S. 445, 451 (1982)), and we may consider an appeal of a post-judgment award of attorney fees “distinct from any previous appeal on the merits,” JPMorgan Chase Bank, N.A. v. Winget, 920 F.3d 1103, 1106–07 (6th Cir. 2019). The SSA‘s other appeal challenges only the district court‘s eight-month deadline to complete the Subtraction Recalculation (which is likely now moot because the Subtraction Recalculation has long been completed). And the SSA conceded that the district court had some authority, either under
C. Judicial-Review Power under § 405(g)
Notwithstanding any preservation issues, the district court appropriately exercised its judicial-review power under
The SSA argues that in ordering the Subtraction Recalculation, the district court was compelling post-decisional agency action rather than reviewing any “final decisions” by the Commissioner. That is a
Section 405(g)‘s “after a hearing” requirement presents more of an interpretative challenge because that prerequisite is not “a matter of mere chronology.” Smith, 139 S. Ct. at 1775. Instead, a “final decision” must be “tethered” to the relevant “hearing” for judicial review under
This case is more like Smith than Sanders. The Subtraction Recalculation entitles claimants to a portion of total benefits that the Commissioner had already determined, after a hearing, properly belong to the claimants. Any post-hearing recalculation is a modification of that decision to ensure that a claimant receives the entire award. A recalculation is “tethered” to a hearing,
The SSA argues that performing the Subtraction Recalculation, like the decision of whether to grant a petition to reopen in Sanders, is a matter of regulatory “agency grace” that warrants no judicial review
Nor could the SSA argue, as a matter of law, that the Subtraction Recalculation is merely an expression of agency goodwill akin to the opportunity to reopen a prior benefits decision. Title XVI of the Social Security Act requires that, “[w]henever the Commissiоner of Social Security finds that more or less than the correct amount of benefits has been paid with respect to any individual, proper adjustment or recovery shall . . . be made by appropriate adjustments in future payments to such individual.”
As the Supreme Court noted in Sanders, Congress‘s decision to limit judicial review in
D. Availability of attorney fees under § 406(b)
The district court therefore properly ordered the SSA to perform the Subtraction Recalculations for the class. The remaining question to resolve is whether Class Counsel may recover attorney fees pursuant to
[w]henever a court renders a judgment favorable to a claimant under [Title II or Title XVI] who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excеss of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment.
The proceedings at issue here map onto the statutory text. The district court entered a “favorable judgment” to claimants, ordering the SSA to pay a certain sum, or a “total of past-due benefits,” that was withheld for the windfall offset and never recalculated. The claimants received legal title to those benefits “by reason of” the district court‘s judgment. In awarding attorney feеs, the district court awarded fifteen percent, or “not in excess of 25 percent,” of the total of those past-due benefits. All of
The SSA argues that the claimants are not “entitled” to the recalculation amount “by reason of” the district court‘s judgment in this case. Any of the claimants’ “entitlements” to benefits, the SSA argues, stemmed from the Commissioner‘s preexisting primary determination of total past-due benefits, which are always fixed by the initial benefits award. We are not convinced.
Under the SSA‘s reading, the claimants’ entitlement under
Like the district court, we are not concerned that counsel may recover twice from claimants’ initial benefits awards. Id. The SSA rightly points out that counsel may have previously obtained attorney fees from securing a primary claim for benefits in district court, and that the Subtraction Recalculation amount is a subset of that total. But again, under the plain text of the statute, the “total” of past-due benefits is tied to the district court‘s judgment, rather than a pool of money that the SSA fixes at the benefits stage. As the district court observed, “[i]t may be unfortunate that Plaintiffs had to bring suit twice to obtain the full amount of past-due benefits owed them. . . . But there is no more injustice in this case than in any other situation where Plaintiffs must hire counsel to vindicate their rights.” Id.
Finally, the SSA argues that
The attorney-fees provision at issue here incentivizes attorneys to vindicate the rights оf claimants who, in many cases, cannot afford counsel. The SSA failed to award claimants additional past-due benefits to which they were entitled. Counsel successfully sought judicial assistance to obtain those benefits, and
IV. REASONABLENESS OF ATTORNEY FEES
The deference that we must afford to district-court judges carries the day for assessing reasonableness. Gisbrecht, 535 U.S. at 808. The district court awarded Class Counsel a fifteen-percent fee, one below
V. CONCLUSION
The district court properly exercised its power under the Social Security Act to modify the SSA‘s final benefits determinations in ordering the SSA to perform statutorily obligated recalculations. For those efforts, the Social Security Act allows Class Counsel to recover attorney fees. Deferring to the district court in determining the reasonableness of those fees, we AFFIRM the district court‘s judgment.
DISSENT
KETHLEDGE, Circuit Judge, dissenting. The district court‘s fee award in this case was a serious mistake. Thе question presented is whether authority for the award came from the Social Security Act, specifically
The section under which the district court purported to grant the injunction was
Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespeсtive of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision[.]
For
Neither prerequisite was met here. As to the first, “the phrase ‘final decision’ clearly denotes some kind of terminal event.” Smith v. Berryhill, 139 S. Ct. 1765, 1774 (2019). But here Steigerwald does not challenge any event at all; instead, as the district cоurt acknowledged, “there is no SSA action to challenge through the administrative review process. Instead, SSA has simply delayed performing, or failed to perform, part of its required review of a claimant‘s benefits.” Nor was there any hearing regarding that same failure to perform. The casus belli for this suit was an omission as to which there was no hearing, not a final decision made after one. That is reason enough to reverse the fee award here.
Nor has Steigerwald sought “review” of a final decision of the Commissioner. The district court asserted (and the majority reiterates here) that its injunction “modified” the Commissioner‘s earlier decisions awarding benefits to Steigerwald and the unnamed class members. But Steigerwald‘s Complaint did not seek review of any aspect of those decisions; indeed the Complaint was filed years after the statute‘s 60-day deadline for seeking review of them. See
The lawful source of authority for a fee award to Steigerwald‘s lawyers was instead the Equal Access to Justice Act. See
The government is entirely correct to characterize the fee award in this case as both unlawful and egregious. I respectfully dissent.